Using Equity Release to Pay for Long-Term Care (2026)
With care costs running to £50,000–£100,000 per year, many homeowners are turning to equity release to fund care at home or avoid residential care altogether. Here's how it works and what to consider.
Yes — equity release can fund care at home, home adaptations, or residential care costs. A drawdown plan is often ideal for care funding because you release funds only as needed. However, if you move into permanent residential care, the plan must be repaid from the sale of the property.
Contents
How much does long-term care cost?
Long-term care costs in the UK are substantial and vary significantly by region and level of care:
| Type of Care | Typical Cost | Annual Cost |
|---|---|---|
| Home care (hourly) | £20–£30 per hour | £15,000–£30,000 (part-time) |
| Live-in care | £1,000–£2,000 per week | £52,000–£104,000 |
| Residential care home | £700–£1,500 per week | £36,000–£78,000 |
| Nursing home (with medical care) | £1,000–£2,500 per week | £52,000–£130,000 |
| Specialist dementia care | £1,200–£3,000 per week | £62,000–£156,000 |
Costs vary significantly by region. London and the southeast are typically 20–40% more expensive than the national average.
For many homeowners, these costs are unaffordable from income and savings alone. Property wealth — often the largest asset — becomes the natural source of funding.
Funding care at home with equity release
Care at home is the preferred option for most people. It allows you to stay in familiar surroundings, maintain independence, and avoid the disruption of moving to a care home.
A drawdown lifetime mortgage is particularly well-suited to funding care at home because:
- You release only what you need, when you need it
- Interest only accumulates on the amount withdrawn, not the total facility
- You can increase withdrawals as care needs intensify
- Funds not yet withdrawn do not count as capital for means-tested benefits
Eileen, 79, from Norwich — Eileen has early-stage dementia and wants to stay at home as long as possible. She needs a carer for 4 hours per day at £25 per hour = £700 per week = £36,000 per year. Her property is worth £280,000.
She takes a drawdown lifetime mortgage with a £100,000 facility. She withdraws £36,000 in year 1, £38,000 in year 2, and £40,000 in year 3. After 3 years, she has withdrawn £114,000 and the total balance (with interest at 5.8%) is approximately £128,000. She still has equity in her home and has avoided residential care for 3 years. Her quality of life is significantly better than it would have been in a care home.
Home adaptations to avoid care
Many homeowners use equity release to fund adaptations that allow them to stay at home safely, delaying or avoiding the need for residential care:
| Adaptation | Typical Cost | Potential Benefit |
|---|---|---|
| Stairlift | £2,000–£5,000 | Access upper floors; avoid moving to a bungalow |
| Walk-in shower / wet room | £3,000–£8,000 | Safe bathing; maintain independence |
| Wheelchair ramp | £1,000–£3,000 | Access to home; avoid moving |
| Downstairs bedroom / bathroom | £10,000–£25,000 | Avoid stairs entirely; delay care home |
| Home lift | £15,000–£30,000 | Full wheelchair access to all floors |
| Smart home technology | £1,000–£5,000 | Fall detection, medication reminders, emergency response |
These adaptations can cost £20,000–£50,000 in total — a fraction of one year's residential care costs. For many, this is a highly cost-effective use of equity release.
Residential care and equity release
If you move into permanent residential care, the equity release plan must be repaid. This is because the plan is designed for your main residence — you must live in the property.
The process works as follows:
- You move into permanent care. The plan comes to an end.
- The property is sold (usually within 12 months).
- The sale proceeds repay the outstanding loan balance.
- Any remaining equity goes to your estate.
This means equity release is not a direct way to fund residential care — the plan must be repaid when you move into care. However, it can still be useful:
- Funding care at home first: Equity release can fund care at home for several years, delaying the move to residential care.
- Top-up fees: If local authority funding covers basic care costs but you want a higher standard, equity release can fund the 'top-up' while you are still at home.
- Partner stays in the home: If one partner moves into care and the other stays at home, the plan continues. The staying partner is not forced to sell.
Means-testing and the £23,250 threshold
Local authorities provide means-tested funding for care. The threshold is:
| Capital Level | Contribution to Care Costs |
|---|---|
| Under £14,250 | Local authority pays full cost |
| £14,250 – £23,250 | You contribute on a sliding scale |
| Over £23,250 | You pay full cost |
If you have equity release funds in your bank account, they count as capital. If the total pushes you over £23,250, you will be responsible for full care costs until your capital falls below the threshold.
This is why a drawdown plan is often recommended for care funding. Funds held in the reserve facility do not count as your capital until you withdraw them. You can withdraw only what you need, keeping your bank balance below the means-testing threshold.
Fund your care at home
See how much you could release to pay for carers, adaptations, or equipment — and compare the cost to residential care.
People Also Ask
Not directly. The plan must be repaid when you move into permanent care. However, equity release can fund care at home for years, delaying the move to residential care.
Yes, if the released funds push your capital over £23,250 (in England), you will be responsible for full care costs. A drawdown plan can help you manage this.
If one partner moves into care and the other stays at home, the equity release plan continues. The staying partner is not forced to sell or repay the loan.
Yes, absolutely. This is one of the most common and cost-effective uses of equity release. Adaptations can cost £20,000–£50,000 — far less than one year of residential care.
The no negative equity guarantee ensures you never owe more than your home is worth. If care costs exhaust your equity, the lender absorbs any shortfall. Your estate is not liable.
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Reviewed by Chris, CII-qualified equity release specialist · Last reviewed July 2026